Exhibit 99.1

Intel Corporation
2200 Mission College Blvd.
Santa Clara, CA 95054-1549
earningsintellogobwa07.jpg News Release


Intel Reports Third-Quarter Financial Results


News Summary:
Record quarterly revenue of $19.2 billion, up 19 percent year-over-year (YoY); data-centric* revenue grew 22 percent and PC-centric revenue grew 16 percent.
Record quarterly GAAP earnings-per-share (EPS) of $1.38 grew 47 percent YoY; non-GAAP EPS of $1.40 was up 39 percent.
Year-to-date, generated $22.5 billion in cash from operations, $11.2 billion of free cash flow and returned $12.6 billion to shareholders, including dividends of $4.17 billion and share repurchases of $8.46 billion.
Raising full-year revenue outlook to $71.2 billion, GAAP EPS outlook to approximately $4.52 and non-GAAP EPS of $4.53; up $1.7 billion, $0.42 and $0.38 from July guidance, respectively.


SANTA CLARA, Calif., October 25, 2018 -- Intel Corporation today reported third-quarter 2018 financial results. Third-quarter revenue of $19.2 billion was an all-time record, up 19 percent YoY driven by broad business strength and customer preference for performance-leading products. The Client Computing Group (CCG), the Data Center Group (DCG), the Internet of Things Group (IOTG), the Non-volatile Memory Solutions Group (NSG) and Mobileye all achieved record revenue. Collectively, data-centric businesses grew 22 percent, led by 26 percent YoY growth in DCG. PC-centric revenue was up 16 percent on continued strength in the commercial and gaming segments. Excellent operating margin leverage and a lower tax rate drove record quarterly EPS.

“Stronger than expected customer demand across our PC and data-centric businesses continued in the third quarter. This drove record revenue and another raise to our full-year outlook, which is now up more than six billion dollars from our January expectations. We are thrilled that in a highly competitive market, customers continue to choose Intel,” said Bob Swan, Intel CFO and Interim CEO. “In the fourth quarter, we remain focused on the challenge of supplying the incredible market demand for Intel products to support our customers' growth. We expect 2018 will be another record year for Intel, and our transformation positions us to win share in an expanded $300 billion1 total addressable market.”
 
Q3 2018 Financial Highlights
 
GAAP
 
Non-GAAP
 
Q3 2018
Q3 2017
vs. Q3 2017
 
Q3 2018
Q3 2017
vs. Q3 2017
Revenue ($B)
$19.2
$16.1
up 19%
 
$19.2^
$16.1^
up 19%
Gross Margin
64.5%
62.3%
up 2.2 pts
 
65.9%
64.0%
up 1.9 pts
R&D and MG&A ($B)
$5.0
$4.9
up 3%
 
$5.0^
$4.8
up 6%
Operating Income ($B)
$7.3
$5.1
up 43%
 
$7.6
$5.6
up 36%
Tax Rate
10.4%
23.8%
down 13.4 pts
 
11.9%
23.8%^
down 11.9 pts
Net Income ($B)
$6.4
$4.5
up 42%
 
$6.5
$4.8
up 34%
Earnings Per Share
$1.38
$0.94
up 47%
 
$1.40
$1.01
up 39%

In the third quarter, the company generated approximately $8.8 billion in cash from operations, paid dividends of $1.4 billion and used $2.7 billion to repurchase 50 million shares of stock.

* Data-centric businesses include DCG, IOTG, NSG, PSG and All Other
1Intel calculated 2022 total addressable market opportunity derived from industry analyst reports and internal estimates.
^ No adjustment on a non-GAAP basis




Intel/Page 2

Business Unit Summary

 
Key Business Unit Revenue and Trends
 
 
Q3 2018
vs. Q3 2017
PC-centric
CCG
$10.2 billion
up
16%
Data-centric
DCG
$6.1 billion
up
26%
IOTG
$919 million
up
8%
NSG
$1.1 billion
up
21%
PSG
$496 million
up
6%
 
 
up
22%*

In the third quarter, Intel achieved growth in every business segment. The PC-centric business (CCG) delivered record revenue, up 16 percent on continued strong demand for Intel's performance-leading products and strength in commercial and gaming. CCG launched new U and Y-series 8th Gen Intel® Core™ processors enabling faster connectivity speeds, better performance and longer battery life for thin, light laptops and 2 in 1 devices. We also recently introduced the Intel Core i9-9900K processor, the world’s best gaming processor1.
Collectively, Intel's data-centric businesses grew 22 percent YoY led by 26 percent growth in the Data Center Group (DCG). DCG achieved record quarterly revenue driven by strong demand from cloud and communications service providers investing to meet the explosive demand for data and to improve the performance of data-intensive workloads like artificial intelligence. In Q3, DCG shipped the first Intel® Optane™ DC Persistent Memory for revenue, and Intel® Xeon® Scalable set 95 new performance world records2 as adoption continued.
The Internet of Things Group (IOTG) also achieved record revenue. Excluding Wind River, which Intel divested in the second quarter, IOTG revenue was up 19 percent YoY on broad business strength. Record revenue in Intel's memory business (NSG) was up 21 percent YoY.
Intel's Programmable Solutions Group (PSG) revenue grew 6 percent YoY with continued strength in the data center and strong organic growth. PSG expanded its product line with the acquisition of eASIC and the introduction of the new Intel® Programmable Acceleration Card (PAC) with Intel® Stratix® 10 SX FPGA.
Mobileye also achieved record quarterly revenue of $191 million, up approximately 50 percent YoY3 as customer momentum continued. Mobileye won 8 new design at major US and global automakers in Q3, bringing its year-to-date design win total to 20.
Additional information regarding Intel’s results can be found in the Q3'18 Earnings Presentation available at: www.intc.com/results.cfm.

1Configuration details are documented here: https://newsroom.intel.com/news-releases/intel-announces-worlds-best-gaming-processor-new-9th-gen-intel-core-i9-9900k/
2 Configuration details are documented here: https://newsroom.intel.com/news/intel-xeon-scalable-processors-set-95-new-performance-world-records/
3Mobileye revenue growth rate includes Q3'17 results prior to Intel's acquisition on August 8, 2017
* Data-centric businesses include DCG, IOTG, NSG, PSG and All Other



Intel/Page 3

Business Outlook
    
Intel's guidance for the fourth-quarter and full-year 2018 include both GAAP and non-GAAP estimates. Reconciliations between these GAAP and non-GAAP financial measures are included below.
Intel’s Business Outlook does not include the potential impact of any business combinations, asset acquisitions, divestitures, strategic investments and other significant transactions that may be completed after October 25, 2018. Actual results may differ materially from Intel’s Business Outlook as a result of, among other things, the factors described under “Forward-Looking Statements” below.
Q4 2018
 
GAAP
 
Non-GAAP
 
 
Approximately
 
Approximately
Revenue
 
$19.0 billion
 
$19.0 billion^
Operating Margin
 
33%
 
34.5%
Tax rate
 
13%
 
13%
Earnings per share
 
$1.16
 
$1.22
Full-Year 2018
 
GAAP
 
Non-GAAP
 
 
Approximately
 
Approximately
Revenue
 
$71.2 billion
 
$71.2 billion^
Operating margin
 
33%
 
34.5%
Tax rate
 
11%
 
12%
Earnings per share
 
$4.52
 
$4.53
Full-year capital spending
 
$15.5 billion
 
$15.5 billion^
Net capital deployed1
 
$14.0 billion
 
$14.0 billion^
Free cash flow
 
N/A
 
$15.5 billion^
1Net capital deployed is full-year capital spending offset by expected prepaid supply agreements within NSG.

Earnings Webcast

Intel will hold a public webcast at 2:00 p.m. PDT today to discuss the results for its third quarter of 2018. The live public webcast can be accessed on Intel's Investor Relations website at www.intc.com/results.cfm. The Q3'18 Earnings Presentation, webcast replay, and audio download will also be available on the site.

Intel plans to report its earnings for the fourth quarter of 2018 on January 24, 2019 promptly after close of market, and related materials will be available at www.intc.com/results.cfm. A public webcast of Intel’s earnings conference call will follow at 2:00 p.m. PDT at www.intc.com.

^ No adjustment on a non-GAAP basis.

Intel/Page 4

Forward-Looking Statements

Intel’s Business Outlook and other statements in this release that refer to future plans and expectations are forward-looking statements that involve a number of risks and uncertainties. Words such as "anticipates," "expects," "intends," "goals," "plans," "believes," "seeks," "estimates," "continues," "may," "will," "would," "should," "could," and variations of such words and similar expressions are intended to identify such forward-looking statements. Statements that refer to or are based on estimates, forecasts, projections, uncertain events or assumptions, including statements relating to total addressable market (TAM) or market opportunity and anticipated trends in our businesses or the markets relevant to them, also identify forward-looking statements. All forward-looking statements included in this news release are based on management's expectations as of the date of this earnings release and, except as required by law, Intel disclaims any obligation to update these forward-looking statements to reflect future events or circumstances. Forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements. Intel presently considers the following to be among the important factors that could cause actual results to differ materially from the company's expectations.

Demand for Intel's products is highly variable and could differ from expectations due to factors including changes in business and economic conditions; customer confidence or income levels; the introduction, availability and market acceptance of Intel's products, products used together with Intel products and competitors' products; competitive and pricing pressures, including actions taken by competitors; supply constraints and other disruptions affecting customers; changes in customer order patterns including order cancellations; and changes in the level of inventory at customers.
Intel's results could vary significantly from expectations based on capacity utilization; variations in inventory valuation, including variations related to the timing of qualifying products for sale; changes in revenue levels; segment product mix; the timing and execution of the manufacturing ramp and associated costs; excess or obsolete inventory; changes in unit costs; defects or disruptions in the supply of materials or resources; and product manufacturing quality/yields. Variations in results may also be caused by the timing of Intel product introductions and related expenses, including marketing programs, and Intel's ability to respond quickly to technological developments and to introduce new products or incorporate new features into existing products, which may result in restructuring and asset impairment charges.
Intel's results could be affected by adverse economic, social, political and physical/infrastructure conditions in countries where Intel, its customers or its suppliers operate, including military conflict and other security risks, natural disasters, infrastructure disruptions, health concerns, fluctuations in currency exchange rates, sanctions and tariffs, and continuing uncertainty regarding social, political, immigration, and tax and trade policies in the U.S. and abroad, including the United Kingdom's vote to withdraw from the European Union. Results may also be affected by the formal or informal imposition by countries of new or revised export and/or import and doing-business regulations, which could be changed without prior notice.
Intel operates in highly competitive industries and its operations have high costs that are either fixed or difficult to reduce in the short term. In addition, in connection with our strategic transformation to a data-centric company, we have entered new areas and introduced adjacent products, where we face new sources of competition and uncertain market demand or acceptance of our products, and these new areas and products may not grow as projected.
The amount, timing and execution of Intel's stock repurchase program may fluctuate based on Intel's priorities for the use of cash for other purposessuch as investing in our business, including operational and capital spending, acquisitions, and returning cash to our stockholders as dividend paymentsand because of changes in cash flows, tax laws, or the market price of our common stock.
Intel's expected tax rate is based on current tax law, including current interpretations of the Tax Cuts and Jobs Act of 2017 (”TCJA”), and current expected income and may be affected by evolving interpretations of TCJA; the jurisdictions in which profits are determined to be earned and taxed; changes in the estimates of credits, benefits and deductions; the resolution of issues arising from tax audits with various tax authorities, including payment of interest and penalties; and the ability to realize deferred tax assets.
Intel's results could be affected by gains or losses from equity securities and interest and other, which could vary depending on gains or losses on the change in fair value, sale, exchange, or impairments of equity and debt investments, interest rates, cash balances, and changes in fair value of derivative instruments.



Intel/Page 5

Product defects or errata (deviations from published specifications) may adversely impact our expenses, revenues and reputation.
We or third parties regularly identify security vulnerabilities with respect to our processors and other products as well as the operating systems and workloads running on them. Security vulnerabilities and any limitations of, or adverse effects resulting from, mitigation techniques can adversely affect our results of operations, financial condition, customer relationships, prospects, and reputation in a number of ways, any of which may be material, including incurring significant costs related to developing and deploying updates and mitigations, writing down inventory value, a reduction in the competitiveness of our products, defending against product claims and litigation, responding to regulatory inquiries or actions, paying damages, addressing customer satisfaction considerations, or taking other remedial steps with respect to third parties. Adverse publicity about security vulnerabilities or mitigations could damage our reputation with customers or users and reduce demand for our products and services. A detailed description of these risks is set forth in the risk factor titled “Third parties regularly attempt to gain unauthorized access to our network, products, services, and infrastructure” in our most recent report on Form 10-K, as updated in our reports on Form 10-Q.
Intel's results could be affected by litigation or regulatory matters involving intellectual property, stockholder, consumer, antitrust, disclosure and other issues. An unfavorable ruling could include monetary damages or an injunction prohibiting Intel from manufacturing or selling one or more products, precluding particular business practices, impacting Intel's ability to design its products, or requiring other remedies such as compulsory licensing of intellectual property.
Intel's results may be affected by the timing of closing of acquisitions, divestitures and other significant transactions.
Detailed information regarding these and other factors that could affect Intel's business and results is included in Intel's SEC filings, including the company's most recent reports on Forms 10-K and 10-Q, particularly the "Risk Factors" sections of those reports. Copies of these filings may be obtained by visiting our Investor Relations website at www.intc.com or the SEC's website at www.sec.gov.


About Intel

Intel (NASDAQ: INTC) expands the boundaries of technology to make the most amazing experiences possible. Information about Intel can be found at newsroom.intel.com and intel.com.




Intel (NASDAQ: INTC) expands the boundaries of technology to make the most amazing experiences possible. Information about Intel can be found at newsroom.intel.com and intel.com.


*Other names and brands may be claimed as the property of others.





Intel/Page 6

INTEL CORPORATION
CONSOLIDATED SUMMARY STATEMENT OF INCOME DATA

 
 
Three Months Ended
 
Nine Months Ended
(In Millions, Except Per Share Amounts; Unaudited)
 
Sep 29,
2018
 
Sep 30,
2017(1)
 
Sep 29,
2018
 
Sep 30,
2017
(1)
NET REVENUE
 
$
19,163

 
$
16,149

 
$
52,191

 
$
45,708

Cost of sales
 
6,803

 
6,085

 
19,681

 
17,388

GROSS MARGIN
 
12,360

 
10,064

 
32,510

 
28,320

Research and development (R&D)
 
3,428

 
3,209

 
10,110

 
9,782

Marketing, general and administrative (MG&A)
 
1,605

 
1,661

 
5,230

 
5,610

R&D AND MG&A
 
5,033

 
4,870

 
15,340

 
15,392

Restructuring and other charges
 
(72
)
 
4

 
(72
)
 
189

Amortization of acquisition-related intangibles
 
50

 
49

 
150

 
124

OPERATING EXPENSES
 
5,011

 
4,923

 
15,418

 
15,705

OPERATING INCOME
 
7,349

 
5,141

 
17,092

 
12,615

Gains (losses) on equity investments, net
 
(75
)
 
846

 
365

 
1,440

Interest and other, net
 
(132
)
 
(57
)
 
225

 
262

INCOME BEFORE TAXES
 
7,142

 
5,930

 
17,682

 
14,317

Provision for taxes
 
744

 
1,414

 
1,824

 
4,029

NET INCOME (LOSS)
 
$
6,398

 
$
4,516

 
$
15,858

 
$
10,288

 
 
 
 
 
 
 
 
 
EARNINGS PER SHARE - BASIC
 
$
1.40

 
$
0.96

 
$
3.42

 
$
2.19

EARNINGS PER SHARE - DILUTED
 
$
1.38

 
$
0.94

 
$
3.35

 
$
2.12

 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
 
 
 
 
 
 
 
 
BASIC
 
4,574

 
4,688

 
4,632

 
4,707

DILUTED
 
4,648

 
4,821

 
4,728

 
4,849

1 Cost of sales, operating expenses, and interest and other, net have been retrospectively restated due to the adoption of ASU 2017-07 in the first quarter of 2018.





















Intel/Page 7

INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA

(In Millions)
 
Sep 29,
2018
 
Dec 30,
2017
CURRENT ASSETS
 
(unaudited)
 
 
Cash and cash equivalents
 
$
3,407

 
$
3,433

Short-term investments
 
2,641

 
1,814

Trading assets
 
7,138

 
8,755

Total cash investments
 
13,186

 
14,002

Accounts receivable
 
5,457

 
5,607

Inventories
 
 
 
 
Raw materials
 
932

 
738

Work in process
 
4,507

 
4,213

Finished goods
 
1,962

 
2,032

 
 
7,401

 
6,983

Other current assets
 
3,546

 
2,908

TOTAL CURRENT ASSETS
 
29,590

 
29,500

 
 
 
 
 
Property, plant and equipment, net
 
47,071

 
41,109

Equity investments
 
7,551

 
8,579

Other long-term investments
 
3,562

 
3,712

Goodwill
 
24,506

 
24,389

Identified intangible assets, net
 
12,007

 
12,745

Other long-term assets
 
3,955

 
3,215

TOTAL ASSETS
 
$
128,242

 
$
123,249

 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
Short-term debt
 
$
3,051

 
$
1,776

Accounts payable
 
3,593

 
2,928

Accrued compensation and benefits
 
3,095

 
3,526

Deferred income
 

 
1,656

Other accrued liabilities
 
9,835

 
7,535

TOTAL CURRENT LIABILITIES
 
19,574

 
17,421

 
 
 
 
 
Debt
 
24,823

 
25,037

Contract liabilities
 
2,220

 

Income taxes payable, non-current
 
4,879

 
4,069

Deferred income taxes
 
1,485

 
3,046

Other long-term liabilities
 
3,263

 
3,791

 
 
 
 
 
TEMPORARY EQUITY
 
515

 
866

 
 
 
 
 
Stockholders' equity
 
 
 
 
Preferred stock
 

 

Common stock and capital in excess of par value
 
25,492

 
26,074

Accumulated other comprehensive income (loss)
 
(1,103
)
 
862

Retained earnings
 
47,094

 
42,083

TOTAL STOCKHOLDERS' EQUITY
 
71,483

 
69,019

TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY
 
$
128,242

 
$
123,249






Intel/Page 8

INTEL CORPORATION
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION

 
 
Three Months Ended
(In Millions)
 
Sep 29,
2018
 
Sep 30,
2017
SELECTED CASH FLOW INFORMATION:
 
 
 
 
Operating activities:
 
 
 
 
Net cash provided by operating activities
 
$
8,835

 
$
6,264

Depreciation
 
$
1,884

 
$
1,690

Share-based compensation
 
$
383

 
$
326

Amortization of intangibles
 
$
390

 
$
365

Investing activities:
 
 
 
 
Additions to property, plant and equipment
 
$
(3,851
)
 
$
(2,979
)
Proceeds from divestitures
 
$

 
$
2,200

Financing activities:
 
 
 
 
Repayment of debt and debt conversion
 
$
(759
)
 
$
(1,002
)
Repurchase of common stock
 
$
(2,657
)
 
$
(1,093
)
Issuance of long-term debt, net of issuance costs
 
$
423

 
$
638

Payment of dividends to stockholders
 
$
(1,373
)
 
$
(1,278
)
 
 
 
 
 
EARNINGS PER SHARE OF COMMON STOCK INFORMATION:
 
 
 
 
Weighted average shares of common stock outstanding - basic
 
4,574

 
4,688

Dilutive effect of employee equity incentive plans
 
40

 
34

Dilutive effect of convertible debt
 
34

 
99

Weighted average shares of common stock outstanding - diluted
 
4,648

 
4,821

 
 
 
 
 
STOCK BUYBACK:
 
 
 
 
Shares repurchased
 
50

 
29

Cumulative shares repurchased (in billions)
 
5.1

 
4.9

Remaining dollars authorized for buyback (in billions)
 
$
4.7

 
$
13.2

 
 
 
 
 
OTHER INFORMATION:
 
 
 
 
Employees (in thousands)
 
107.1

 
102.0




Intel/Page 9

INTEL CORPORATION
SUPPLEMENTAL OPERATING SEGMENT RESULTS
 
 
Three Months Ended
 
Nine Months Ended
(In Millions)
 
Sep 29,
2018
 
Sep 30,
2017
(1)
 
Sep 29,
2018
 
Sep 30,
2017
(1)
Net Revenue
 
 
 
 
 
 
 
 
Client Computing Group
 
 
 
 
 
 
 
 
Platform
 
$
9,023

 
$
8,132

 
$
24,703

 
$
23,163

Adjacency
 
1,211

 
728

 
2,479

 
1,886

 
 
10,234

 
8,860

 
27,182

 
25,049

Data Center Group
 
 
 
 
 
 
 
 
Platform
 
5,637

 
4,439

 
15,561

 
12,344

Adjacency
 
502

 
439

 
1,361

 
1,138

 
 
6,139

 
4,878

 
16,922

 
13,482

Internet of Things Group
 
 
 
 
 
 
 
 
Platform
 
855

 
680

 
2,319

 
1,926

Adjacency
 
64

 
169

 
320

 
364

 
 
919

 
849

 
2,639

 
2,290

Non-Volatile Memory Solutions Group
 
1,081

 
891

 
3,200

 
2,631

Programmable Solutions Group
 
496

 
469

 
1,511

 
1,334

All Other
 
294

 
202

 
737

 
922

TOTAL NET REVENUE
 
$
19,163

 
$
16,149

 
$
52,191

 
$
45,708

Operating income (loss)
 
 
 
 
 
 
 
 
Client Computing Group
 
$
4,532

 
$
3,600

 
$
10,557

 
$
9,656

Data Center Group
 
3,082

 
2,255

 
8,421

 
5,403

Internet of Things Group
 
321

 
146

 
791

 
390

Non-Volatile Memory Solutions Group
 
160

 
(52
)
 
14

 
(291
)
Programmable Solutions Group
 
106

 
113

 
304

 
302

All Other
 
(852
)
 
(921
)
 
(2,995
)
 
(2,845
)
TOTAL OPERATING INCOME
 
$
7,349

 
$
5,141

 
$
17,092

 
$
12,615

1 Cost of sales, operating expenses, and interest and other, net have been retrospectively restated due to the adoption of ASU 2017-07 in the first quarter of 2018.
In the third quarter of 2017, Intel completed its tender offer for the outstanding ordinary shares of Mobileye B.V. (Mobileye), formerly known as Mobileye N.V. In the second quarter of 2017, Intel completed its divestiture of Intel Security Group (ISecG). The results of Mobileye and ISecG are reported within the "All Other" category.
Revenue for our reportable and non-reportable operating segments is primarily related to the following product lines:
CCG is responsible for all aspects of the client computing continuum, which includes platforms designed for end-user form factors, focusing on high growth segments of 2-in-1, thin-and-light, commercial and gaming, and growing adjacencies as well as connectivity technologies.
DCG develops workload-optimized platforms for compute, storage, network, and related functions, which are designed for and sold into the enterprise and government, cloud, and communications service providers market segments.
IOTG develops and sells high-performance Internet of Things compute solutions for retail, automotive, industrial, and video surveillance market segments, along with a broad range of other embedded applications. These market-driven solutions utilize silicon and software assets from our data center and client businesses to expand our compute footprint into Internet of Things market segments.
NSG offers lntel® Optane and lntel® 3D NAND technologies, which drive innovation in solid-state drives (SSDs) and other memory products. The primary customers are enterprise and cloud-based data centers, users of business and consumer desktops and laptops, and a variety of embedded and Internet of Things application providers.
PSG offers programmable semiconductors, primarily field-programmable gate arrays (FPGAs) and related products for a broad range of market segments, including communications, data center, industrial, military, and automotive.
We have sales and marketing, manufacturing, engineering, finance, and administration groups. Expenses for these groups are generally allocated to the operating segments and the expenses are included in the following operating results.
All other category includes revenue, expenses, and charges such as:
results of operations from non-reportable segments not otherwise presented, including Mobileye results;
historical results of operations from divested businesses;
results of operations of start-up businesses that support our initiatives, including our foundry business;
amounts included within restructuring and other charges;
a portion of employee benefits, compensation, and other expenses not allocated to the operating segments; and
acquisition-related costs, including amortization and any impairment of acquisition-related intangibles and goodwill.
A substantial majority of our revenue is generated from the sale of platform products. Platform products incorporate various components and technologies, including a microprocessor and chipset, a stand-alone SoC, or a multi-chip package. Our remaining primary product lines are incorporated in "adjacency."



Intel/Page 10

INTEL CORPORATION

Supplemental Platform Revenue Information
 
 
Q3 2018
 
Q3 2018
 
YTD 2018
 
 
compared to Q2 2018
 
compared to Q3 2017
 
compared to YTD 2017
Client Computing Group Platform
 
 
 
 
 
 
Notebook platform volumes
 
12%
 
8%
 
5%
Notebook platform average selling prices
 
1%
 
4%
 
2%
Desktop platform volumes
 
15%
 
1%
 
(5)%
Desktop platform average selling prices
 
(1)%
 
10%
 
10%
 
 
 
 
 
 
 
Data Center Group Platform
 
 
 
 
 
 
Unit Volumes
 
11%
 
15%
 
15%
Average Selling Prices
 
(1)%
 
10%
 
10%









Intel/Page 11

INTEL CORPORATION
EXPLANATION OF NON-GAAP MEASURES

In addition to disclosing financial results in accordance with U.S. generally accepted accounting principles (GAAP), this earnings release contains references to the non-GAAP financial measures described below. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business and measuring our performance.
Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects. Income tax effects have been calculated using an appropriate tax rate for each adjustment. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated.
Acquisition-related adjustments: The non-GAAP financial measures disclosed by the company exclude certain business combination accounting adjustments and certain expenses related to acquisitions.
Inventory valuation adjustments: Business combination accounting principles require us to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company's cost of manufacturing plus a portion of the expected profit margin. The non-GAAP adjustments to our cost of sales exclude the expected profit margin component that is recorded under business combination accounting principles associated with our acquisition of Mobileye. We believe the adjustments are useful to investors as an additional means to reflect cost of sales and gross margin trends of our business.
Amortization of acquisition-related intangible assets: Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as developed technology, brands, and customer relationships acquired in connection with business combinations. We record charges related to the amortization of these intangibles within both cost of sales and operating expenses in our GAAP financial statements. Amortization charges for our acquisition-related intangible assets are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions. Consequently, our non-GAAP adjustments exclude these charges to facilitate an evaluation of our current operating performance and comparisons to our past operating performance.
Other acquisition-related charges: Other acquisition-related charges exclude the impact of other charges associated with the acquisition of Mobileye. These charges primarily include bankers' fees, compensation-related costs, and valuation charges for stock-based compensation incurred related to the acquisition. We believe these adjustments are useful to investors as an additional means to reflect the spending trends of our business.
Restructuring and other charges: Restructuring charges are costs associated with a formal restructuring plan and are primarily related to employee severance and benefit arrangements. Other charges include asset impairments, pension charges, and costs associated with the ISecG divestiture. We exclude restructuring and other charges, including any adjustments to charges recorded in prior periods, for purposes of calculating certain non-GAAP measures. We believe that these costs do not reflect our current operating performance. Consequently, our non-GAAP adjustments exclude these charges to facilitate an evaluation of our current operating performance and comparisons to our past operating performance.
Ongoing mark to market on marketable equity securities: We exclude gains and losses resulting from ongoing mark to market adjustments of our marketable equity securities when calculating certain non-GAAP measures, as we do not believe this volatility correlates to our core operational performance. Consequently, our non-GAAP earnings per share figures exclude these impacts to facilitate an evaluation of our current performance and comparisons to our past operating performance.
Gains or losses from divestitures: We divested ISecG in Q2 2017 and Wind River in Q2 2018. We exclude gains or losses, and related tax impacts, resulting from divestitures when calculating certain non-GAAP measures. We believe making these adjustments facilitates a better evaluation of our current operating performance and comparisons to our past operating performance.
Tax Reform adjustment: During 2018, we made adjustments to our U.S. Tax Cuts and Jobs Act (Tax Reform) provisional tax estimates that we recorded in Q4 2017. We exclude these provisional tax adjustments when calculating certain non-GAAP measures. We believe making this adjustment facilitates a better evaluation of our current operating performance and comparisons to past operating results.
Free cash flow: We reference a non-GAAP financial measure of free cash flow, which is used by management when assessing our sources of liquidity, capital resources, and operating performance. We believe this non-GAAP financial measure is helpful to investors in understanding our capital structure and provides an additional means to reflect the cash flow trends of our business.



Intel/Page 12

INTEL CORPORATION
SUPPLEMENTAL RECONCILIATIONS OF GAAP OUTLOOK TO NON-GAAP OUTLOOK
Set forth below are reconciliations of the non-GAAP financial measure to the most directly comparable GAAP financial measure. The non-GAAP financial measures disclosed by the company have limitations and should not be considered a substitute for, or superior to, the financial measures prepared in accordance with GAAP, and the financial outlook prepared in accordance with GAAP and the reconciliations from this Business Outlook should be carefully evaluated. Please refer to "Explanation of Non-GAAP Measures" in this document for a detailed explanation of the adjustments made to the comparable GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.
 
 
Q4 2018 Outlook
 
Full-Year 2018
 
 
 
 
 
 
 
Approximately
 
Approximately
GAAP OPERATING MARGIN
 
33
%
 
33
%
Amortization of acquisition-related intangible assets
 
1.5
%
 
1.5
%
NON-GAAP OPERATING MARGIN
 
34.5
%
 
34.5
%
 
 
 
 
 
GAAP TAX RATE
 
13
%
 
11
%
Other
 
%
 
1.0
%
NON-GAAP TAX RATE
 
13
%
 
12
%
 
 
 
 
 
EARNINGS PER SHARE - DILUTED
 
$
1.16

 
$
4.52

Restructuring and other charges
 

 
(0.02
)
Amortization of acquisition-related intangible assets
 
0.07

 
0.28

Ongoing mark to market on marketable equity securities
 

 
(0.08
)
(Gains) losses from divestitures
 

 
(0.11
)
Tax Reform
 

 
(0.06
)
Income tax effect
 
(0.01
)
 

NON-GAAP EARNINGS PER SHARE - DILUTED
 
$
1.22

 
$
4.53

(In Billions)
 
Full-Year 2018
 
 
 
GAAP CASH FROM OPERATIONS
 
$
31.0

Additions to property, plant and equipment
 
(15.5
)
FREE CASH FLOW
 
$
15.5




Intel/Page 13

INTEL CORPORATION
SUPPLEMENTAL RECONCILIATIONS OF GAAP ACTUALS TO NON-GAAP ACTUALS
Set forth below are reconciliations of the non-GAAP financial measure to the most directly comparable GAAP financial measure. The non-GAAP financial measure disclosed by the company has limitations and should not be considered a substitute for, or superior to, the financial measure prepared in accordance with GAAP, and the reconciliations from GAAP to Non-GAAP actuals should be carefully evaluated. Please refer to "Explanation of Non-GAAP Measures" in this document for a detailed explanation of the adjustment made to the comparable GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.
 
Three Months Ended
 
Nine Months Ended
(In Millions, Except Per Share Amounts)
Sep 29,
2018
 
Sep 30,
2017(1)
 
Sep 29,
2018
 
Sep 30,
2017(1)
 
 
 
 
 
 
 
 
GAAP GROSS MARGIN
$
12,360

 
$
10,064

 
$
32,510

 
$
28,320

Inventory valuation adjustments

 
27

 

 
27

Amortization of acquisition-related intangible assets
276

 
243

 
826

 
650

NON-GAAP GROSS MARGIN
$
12,636

 
$
10,334

 
$
33,336

 
$
28,997

 
 
 
 
 
 
 
 
GAAP GROSS MARGIN PERCENTAGE
64.5
%
 
62.3
%
 
62.3
%
 
62.0
 %
Inventory valuation adjustments
%
 
0.2
%
 
%
 
0.1
 %
Amortization of acquisition-related intangible assets
1.4
%
 
1.5
%
 
1.6
%
 
1.3
 %
NON-GAAP GROSS MARGIN PERCENTAGE
65.9
%
 
64.0
%
 
63.9
%
 
63.4
 %
 
 
 
 
 
 
 
 
GAAP R&D PLUS MG&A SPENDING
$
5,033

 
$
4,870

 
$
15,340

 
$
15,392

Other acquisition-related charges

 
(113
)
 

 
(113
)
NON-GAAP TOTAL DIRECT EXPENSES
$
5,033

 
$
4,757

 
$
15,340

 
$
15,279

 
 
 
 
 
 
 
 
GAAP OPERATING INCOME
$
7,349

 
$
5,141

 
$
17,092

 
$
12,615

Inventory valuation adjustments

 
27

 

 
27

Amortization of acquisition-related intangible assets
326

 
292

 
976

 
774

Other acquisition-related charges

 
113

 

 
113

Restructuring and other charges
(72
)
 
4

 
(72
)
 
189

NON-GAAP OPERATING INCOME
$
7,603

 
$
5,577

 
$
17,996

 
$
13,718

 
 
 
 
 
 
 
 
GAAP TAX RATE
10.4
%
 
23.8
%
 
10.3
%
 
28.1
 %
Divestiture of Intel Security
%
 
%
 
%
 
(5.1
)%
Other
1.5
%
 
%
 
1.5
%
 
 %
NON-GAAP TAX RATE
11.9
%
 
23.8
%
 
11.8
%
 
23.0
 %
 
 
 
 
 
 
 
 
GAAP NET INCOME
$
6,398

 
$
4,516

 
$
15,858

 
$
10,288

Inventory valuation adjustments

 
27

 

 
27

Amortization of acquisition-related intangible assets
326

 
292

 
976

 
774

Other acquisition-related charges

 
113

 

 
113

Restructuring and other charges
(72
)
 
4

 
(72
)
 
189

Ongoing mark to market on marketable equity securities
(8
)
 

 
(379
)
 
 
(Gains) losses from divestitures

 

 
(494
)
 
(387
)
Tax Reform
(113
)
 

 
(294
)
 

Income tax effect
(23
)
 
(104
)
 
28

 
568

NON-GAAP NET INCOME
$
6,508

 
$
4,848

 
$
15,623

 
$
11,572

 
 
 
 
 
 
 
 
EARNINGS PER SHARE - DILUTED
$
1.38

 
$
0.94

 
$
3.35

 
$
2.12

Inventory valuation adjustments

 
0.01

 

 
0.01

Amortization of acquisition-related intangible assets
0.07

 
0.06

 
0.21

 
0.16

Other acquisition-related charges

 
0.02

 

 
0.02

Restructuring and other charges
(0.02
)
 

 
(0.02
)
 
0.04

(Gains) losses from divestitures

 

 
(0.10
)
 
(0.08
)
Ongoing mark to market on marketable equity securities

 

 
(0.08
)
 

Tax Reform
(0.02
)
 

 
(0.06
)
 

Income tax effect
(0.01
)
 
(0.02
)
 

 
0.12

NON-GAAP EARNINGS PER SHARE - DILUTED
$
1.40

 
$
1.01

 
$
3.30

 
$
2.39

 
Nine Months Ended
(In Millions)
Sep 29,
2018
 
 
GAAP CASH FROM OPERATIONS
$
22,532

Additions to property, plant and equipment
(11,291
)
FREE CASH FLOW
$
11,241

1 Cost of sales, operating expenses, and interest and other, net have been retrospectively restated due to the adoption of ASU 2017-07 in the first quarter of 2018.


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